why the lodestar amount was unreasonable, and in particular, as to why the quality of representation was not reflected in the [lodestar]," the Court found "no reason to increase the fee award . . . for the quality of representation." Id. at 3100.
In recognition of Delaware Valley I's demanding standard for awarding enhancements based on quality of representation, plaintiffs have only requested such an enhancement in the event the Court uses their historic billing rates in calculating the lodestar. In this regard, plaintiffs contend that were they to receive compensation based upon their own below-market rates, the lodestar would reflect neither the special skill and experience of counsel nor the quality of representation in this case. See Delaware Valley I, supra, 106 S. Ct. at 3098. Plaintiffs thus claim that the quality of their representation can only be adequately compensated through an upward adjustment of their below-market hourly rates to market rate levels.
In view of plaintiffs' concession in this respect, the Court concludes that its adjustment of plaintiffs' historic rates to a level commensurate with prevailing community market rates adequately compensates them for the quality of their representation in this case. Accordingly, plaintiffs' request for an enhancement of the lodestar for superior quality of representation will be denied.
C. Appropriateness of an Enhancement to Compensate for Risk of Nonpayment
In addition to its previous award of a 54.75 percent enhancement of the lodestar for quality of representation, the Court awarded plaintiffs a 20 percent enhancement for the risk of not prevailing in this litigation. 594 F. Supp. 433, 438-442. The criteria formerly used by the Court in concluding that a risk of loss enhancement was appropriate however, must now be reconsidered in light of the guidelines set forth in the Supreme Court's recent plurality opinion addressing this issue in Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 483 U.S. 711, 107 S. Ct. 3078, 97 L. Ed. 2d 585 (1987) (" Delaware Valley II ").
Mitigation of Risk of Nonpayment through Partially Contingent Fee Agreements
In Delaware Valley II, Justice O'Connor concurred with the plurality's essential proposition that unless an attorney, who is otherwise eligible for an award of attorneys's fees under a fee shifting statute, has an agreement with the client that the attorney will be paid, win or lose, the attorney assumes the risk of being paid nothing at all should the case be lost. Id. 107 S. Ct. at 3092 (O'Connor, J., concurring in part and concurring in judgment). "When the plaintiff has agreed to pay its attorney, win or lose" however, "the attorney has not assumed the risk of nonpayment and there is no occasion to adjust the lodestar fee because the case was a risky one." Id. 107 S. Ct. at 3082.
In the case at bar, plaintiff Alison Palmer and the attorney fee claimants entered into various formal retainer agreements obligating Ms. Palmer to pay attorney's fees on an ongoing basis at an average hourly rate of $ 28.51. This rate was approximately 53 percent of plaintiffs' average historical billing rate of $ 53.57. As such, plaintiffs' risk of recovering no attorney's fees in this case was significantly mitigated by Ms. Palmer's obligation to pay them an hourly rate of $ 28.51 irrespective of the outcome of the litigation. See Delaware Valley II, supra, 107 S. Ct. 3078, 3099 (Blackmun, J., dissenting).
Plaintiffs acknowledge that their risk of recovering no fees in this case was substantially mitigated by Ms. Palmer's obligation to pay them half their customary fee, win or lose; however, they contend that they are entitled to a contingency enhancement to compensate them for the risk of not recovering the balance of their customary fee in the event the case were ultimately lost. In this regard, plaintiffs submit that the market regularly compensates quasi-contingent fee cases at a higher rate than non-contingent cases. See discussion regarding market treatment of contingency cases, infra. In response, defendant argues that the partially contingent fee agreement between plaintiffs and Ms. Palmer adequately insulated plaintiffs from the risk of loss inherent in a fully contingent case, and maintains that plaintiffs must demonstrate why the recovery of partial fees did not provide adequate compensation for the risk they undertook.
The Court rejects defendant's arguments in this regard and concludes that plaintiffs are entitled to present their claim for a contingency enhancement since a substantial portion of their customary hourly rates was subject to nonrecovery in the event they did not prevail in this litigation. However, because plaintiffs were able to mitigate the risk of nonrecovery through their quasi-contingent agreement with Ms. Palmer, the Court concludes that, assuming contingency enhancement is otherwise appropriate in this matter, plaintiffs would only be entitled to the market's lowest prevailing contingency enhancement rate for quasi-contingent cases. See discussion infra.
Availability of Contingency Enhancement to Portion of Fees Subject to Risk of Loss
Pursuant to the guidelines set forth in Delaware Valley II, supra, a contingency enhancement may only be awarded upon a fee applicant's showing that 1) the rates of compensation in the private market for contingent fee cases as a class differ from those where counsel is paid, win or lose, on a regular basis; and 2) without an adjustment for risk the prevailing party would have faced "substantial difficulties in finding counsel." Id. 107 S. Ct. 3078, 3089-91 (O'Connor, J., concurring in part). In order to demonstrate that the local private market treats contingent fee cases as a class differently than non-contingency cases, plaintiffs have shown that attorneys in the Washington D.C. community will only accept a fully contingent case if their recovery will be at least double their normal hourly billing rate and will only accept a partially contingent case if their recovery is enhanced by at least 50 percent. The following affidavit is illustrative of the general sentiment of attorneys who handle contingency cases:
In my assessment as to whether to accept a contingency fee case on behalf of a would-be plaintiff (where there is a reasonable doubt as to the outcome), I make an economic judgment as to whether I can reasonably anticipate that the case will produce three times the normal hourly rates of the attorneys in my firm who will be working on the case. Otherwise the economics of the case do not justify our firm becoming involved with it. Certainly, if I project that even if successful my firm can only recover a fee which equals the fee computed at normal hourly rates, then the case does not justify the effort on our firm's part.
Decl. Clifford, Pltfs' Ex. H. See also Pltfs' Exhbts. T; X; AA.
In view of plaintiffs' thorough documentation of the degree to which the market compensates for contingency, the Court finds that plaintiffs have clearly established that attorneys in the Washington D.C. community will ordinarily not take cases on a contingency basis without an upward adjustment of their normal hourly rate of at least 100 percent. The Court further finds that plaintiffs' documentation of the market's treatment of partially contingent cases supports the conclusion that attorneys will not undertake a case in which they are insured recovery of only a portion of their fees absent an upward adjustment of at least fifty percent. As such, plaintiffs have fully substantiated their claim that the market regularly compensates partially contingent cases at a higher rate than non-contingent cases.
In addition to the requirement that a fee applicant demonstrate how the relevant market treats contingency cases as a class, Justice O'Connor concluded:
I would also hold that a court may not enhance a fee award any more than necessary to bring the fee within the range that would attract competent counsel. I agree with the plurality that no enhancement for risk is appropriate unless the applicant can establish that without an adjustment for risk the prevailing party "would have faced substantial difficulties in finding counsel in the local or other relevant market."